Post from Guest Contributor Chris Blanton, editor of Ingenious Business Guide.
Many business owners leave money on the table by reacting to pricing pressure by haggling or discounting.
Seasoned deal makers assert in a negotiation that the first person to name a figure loses. Information has value, and the one who possesses more of it is better positioned to come out ahead in a transaction. When one party is ignorant of their opponent’s expectations, the best strategy is to get the other party to name a starting price.
When, as in retail sales, the seller publishes the price, buyers are forearmed with the seller’s expectation but the seller is not similarly equipped with the buyers’. Thus a seller who exhibits price flexibility puts herself at a disadvantage because she better arms her buyer.
Sometimes a prospect will push for a discount. What is their underlying motive? Do they truly demand a reduction to buy? Contrary to popular myth, a customer will almost never engage you in the buying process without being able to afford the product. Price objections from customers arise when they’re probing your confidence level. If they sense you wavering, they may interpret it as a lack of confidence in your product or service.
Believe it or not, your clients are hoping you’ll stay firm.
To bear this out, imagine you’re looking at a vehicle on a dealer’s lot. It sports a ten thousand dollar sticker but you really want it. The salesperson sidles up and you blurt out a figure that you expect will presage a lengthy negotiation “I like this car but I didn’t want to spend more than eight thousand dollars.” Upon which the rep replies “$8000? Sold!”
Do you feel confident in your new purchase? No, you’re anxiously reevaluating your decision, worried you may have just made a huge mistake, aren’t you?
Now imagine the same situation but instead of giving in the rep smiles confidently at your statement and begins discussing the value of the vehicle.
As a consumer, which experience would you rather have?
In this same way, your customers look to you to demonstrate confidence in your offering. If you exhibit conviction in the value you provide, your client will expect the price to be firm. When a qualified client reconsiders a purchase at the last minute or brings up price, the culprit is usually uneasiness brought about by the salesperson’s lack of confidence. This is also the point when your savvier consumers (often salespeople themselves) may opt to push for a discount.
If a customer starts to haggle or seems to question the value, realize that it is probably because you have opened the door by failing to demonstrate your conviction. To recapture lost momentum, express confidence in the value. Whatever you do, don’t become defensive. Build trust. Only then will you convey the value to your client and assuage their anxiety. Confidence is the secret to POWER negotiation!